Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 16-5 Change in tax rate; record taxes for four years [LO16-1, 16-4, 16-5] The DeVille Company reported pretax accounting income on its income statement

Problem 16-5 Change in tax rate; record taxes for four years [LO16-1, 16-4, 16-5]

The DeVille Company reported pretax accounting income on its income statement as follows:

2018 $ 405,000
2019 325,000
2020 395,000
2021 435,000

Included in the income of 2018 was an installment sale of property in the amount of $52,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $20,800 in 2019, $26,000 in 2020, and $5,200 in 2021. Included in the 2020 income was $21,000 interest from investments in municipal bonds. The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond. Required: Prepare the year-end journal entries to record income taxes for the years 20182021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

13th Edition

978-0073379616, 73379611, 978-0697789938

More Books

Students also viewed these Accounting questions